6 Things about Money You Should Have Learned in School

6 Things about Money You Should Have Learned in School

Money moves the world. Whether we like it or not. It is everyday reality of our lives, a necessary part of every economic transaction, and if money did not exist, we would have to invent them again.

Interestingly, only few of us admit publicly that we have positive relationship with them.

It’s kind of a social norm to reflect on money negatively. In terms of “I do not care about money, health is much more important,” and so on. Explaining the positive relationship to money is a sign of some rebellion.

Try to say that you’re doing something for money and you’re just a raper.

The reality is completely different.

 

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6 Things about Money You Should Have Learned in School – Don’t rely on school

 

You may have learned that money is:

  • a legal payment (you can pay insurance, loans, mortgages, taxes or other debts)
  • preserving value
  • medium of exchange

The medium of exchange is probably the most important official function of money that everyone, perhaps only subconsciously, knows.

It is certainly much easier and more efficient to pull a bank note or card out of your purse than to think about how much kernel you should pay for a goat.

Even though you know these 3 features “like your shoes”, it’s better not to manage your money.

Now is the best time to do something about it (Life Is Movement. Stagnation Is Death.). So here are 6 things about money you should have learned in school (or at home), but you did not.

The good news is that it’s never too late:

 

1. Don’t believe in fairy tales – you can buy luck with money

American psychologist Maslow said that the need for a happy and happy life must be met. He created the well-known Maslow’s Pyramid of Needs:

 

Maslow's Hierarchy of Needs Things about Money You Should Have Learned in School

 

They are arranged in a hierarchy – firstly needs at the lowest level should be satisfied.

So let’s look at it – to satisfy the lowest 2 levels you need money. Not necessarily a lot, but enough to live according to your expectations.

To meet the needs in the top 3 levels, you need the primary time. But if you’re doing 12 hours a day to have enough money on the bottom, you will not get anywhere.

Of course, if you have a job where you earn enough and at the same time you satisfy the needs of the top 2 levels, and still have enough time to fullfil the whole 3rd level, we should just congratulate you.

It is also good to think about what happens when you come to lose your job, you will no longer be able to do it at all, or you will want to reduce your working time.

Again, we talk about money or your financial assets ( Want to Start a Business while Working Full Time? ).

 

2. Good money management is not about mathematics but about emotions, temperament and psychology

Many people think that they need complex mathematical formulas to manage their money.

The truth is, however, that what you learned from mathematics at elementary school is enough. Of course, it is good to know few basic concepts, such as compound interest or volatility.

The fact that we have high loans is not really a math problem.

What is decisive is how you behave and what is your nature – whether you are influenced by the advertising and lifestyle of people around you or in ladies’ magazines,or you can think in longer time horizons than a week or you are able to set a goal and meet it and so on.

 

3. If you do not know where you are going, you will never get there

Goal setting is very important – it helps you maintain the right direction, monitor progress, and maintain motivation.

And they should not be too long-term – e. g. “I want to earn enough for a retirement” is not a good goal (I know you want, but the retirement is far and the situation in general and your specific can be changed a hundred times).

I rather have procedural goals – instead of “I want to have assets of USD 500,000 in 15 years”, the better target is “On regular basis I will monthly save and invest 20% of my income.” ( Get Rid of Bad Spending Habits: 5 Necessary Steps )

A better goal than “I want to run 10km under 25 minutes” is “I will practice regularly 3 times a week so that my performance will continue to grow.”

This was number 3 out of 6 things about money you should have learned in school. Let’s move on.

 

4. The measure of your financial stability is not the amount of income but the amount of net assets

Of course, ceteris paribus, higher income is better than income lower.

But I know people with relatively low income and financial assets in tens of thousands of dollars and people with high income, for whom a temporary income outage (due to injury for example) would be a serious financial problem.

You can live in luxury, have many expensive toys and go on exclusive holidays, but if you have no financial reserve and the only source of your income is your work you have a big problem.

Not to mention that if you want to keep this lifestye forever, you must work hard as well forever.

 

5. If you want to build a fortune, you have to spend less than you earn

All wealthy people became rich without exception by investing. (exceptions are only those who have inherited the property, but in this case, their ancestors have built it by investing).

The goal does not have to become rich (although it is, I have no problem with it) – it is enough to build a fortune that is big enough to be able to live a life according to your ideas and do not have to think about money at night.

But if you spend everything you earn, you will not have sources to build it. It’s also easy.

 

6. Invest into yourself first. But not the way you think

Not only Every book about money or personal financial advisor, but also every luxury goods seller tells you to invest into yourself. But what exactly does it mean?

Do not talk that holiday in the Maldives or Guchi’s new handbag is an investment for yourself. That’s just an ordinary miss (read our article Time to Start a New Chapter in Your Life ).

Investment into yourself is one that either increases your productivity or income potential (increasing knowledge, skills, abilities).

Because you are your most valuable asset and have to keep in shape (you don’t have to buy expensive membership in a fitness or personal trainer).

And also invest in either your business or your financial assets. Because you want to replace yourself once as the main source of your income.

The first money from your account right after you get a payoff should go to the savings account or term deposit.

Why is it important? You set saving and investing as a mental priority. You make it clear that you are more important than an electricity distribution company or a leasing company.

But if you’re going to wait until the end of the month, you will never end up doing anything. I guarantee.

 

Source: full article in slovak language

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